BondBloxx Adds 8 Target Duration ETFs

September 15, 2022

Fixed income exchange-traded fund issuer BondBloxx, which just entered the market in February, added eight ETFs to its rapidly growing lineup Thursday. The new funds are the first of their kind and track indexes that target specific durations, and are as follows:  

Each of the funds comes with an expense ratio of 0.03% and lists on the NYSE Arca.  

The new funds are the first of their kind in that no existing fixed income ETFs target specific durations. All eight ETFs track Bloomberg indexes that are constructed by sorting eligible components into two different buckets based on duration ranges. From there, the two buckets are individually weighted by market capitalization and blended together such that the resulting duration for the index aligns with the fund’s target duration.  

For example, XTWO’s index draws its components from the Bloomberg US Treasury Index, sorting the securities into a one- to two-year duration bucket and a two- to three-year duration bucket. The components in each bucket are weighted by market capitalization and then both buckets are combined and weighted such that the resulting index has a two-year duration.  

The new funds bring the total number of ETFs in BondBloxx’s lineup to 19. The firm was founded by ETF industry veterans with the intention of providing ETFs that target specific slices of the fixed income space.  

The U.S. bond market is worth roughly $49 trillion, while the U.S. equity market is worth roughly $44 trillion, according to the Securities Industry and Financial Markets Association, but there are only 411 ETFs representing U.S. fixed income markets, while there are more than 1,200 ETFs covering U.S. equities.  

With U.S. equities having been sliced into so many configurations for ETFs, it seems there is room for at least as much growth in the fixed income space, especially given that it represents roughly $5 trillion more than the equity markets.  

 

Contact Heather Bell at [email protected] 

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